Great Depression

Great Depression in U.S. history, the severe economic crisis supposedly precipitated by the U.S. stock-market crash of 1929. Although it shared the basic characteristics of other such crises (see depression ), the Great Depression was unprecedented in its length and in the wholesale poverty and tragedy it inflicted on society. Economists have disagreed over its causes, but certain causative factors are generally accepted. The prosperity of the 1920s was unevenly distributed among the various parts of the American economy—farmers and unskilled workers were notably excluded—with the result that the nation's productive capacity was greater than its capacity to consume. In addition, the tariff and war-debt policies of the Republican administrations of the 1920s had cut down the foreign market for American goods. Finally, easy-money policies led to an inordinate expansion of credit and installment buying and fantastic speculation in the stock market. The American depression produced severe effects abroad, especially in Europe, where many countries had not fully recovered from the aftermath of World War I; in Germany, the economic disaster and resulting social dislocation contributed to the rise of Adolf Hitler. In the United States, at the depth (1932-33) of the depression, there were 16 million unemployed—about one third of the available labor force. The gross national product declined from the 1929 figure of $103,828,000,000 to $55,760,000,000 in 1933. The economic, agricultural, and relief policies of the New Deal administration under President Franklin Delano Roosevelt did a great deal to mitigate the effects of the depression and, most importantly, to restore a sense of confidence to the American people. Yet it is generally agreed that complete business recovery was not achieved and unemployment ended until the government began to spend heavily for defense in the early 1940s.

Bibliography: See D. Wecter, The Age of the Great Depression (1948, repr. 1956); A. M. Schlesinger, Jr., The Crisis of the Old Order (1957); D. A. Shannon, ed., The Great Depression (1960); A. U. Romasco, The Poverty of Abundance (1965); G. Rees, The Great Slump (1970); C. P. Kindleberger, The World in Depression (1973); D. M. Kennedy, Freedom from Fear (1999); T. H. Watkins, The Hungry Years (1999).

Great Depression Severe economic depression that afflicted the USA throughout the 1930s. At the close of the 1920s, economic factors such as over-production, unrealistic credit levels, stock market speculation, lack of external markets, and unequal distribution of wealth all contributed to the prolonged economic crisis. The dramatic collapse of the stock market in October 1929 saw US$30,000 million wiped off stock values in the first week. Bank failures became commonplace. At the depth of the Depression (1932–33), unemployment stood at 16 million, almost 33% of the total workforce. The gross national product fell by almost 50%. The Hawley-Smoot Tariff Act increased US tariffs and effectively spread the depression worldwide. Franklin D. Roosevelt, sensing the national emergency, instituted the New Deal, which helped to mitigate the worst effects of the crisis. The economy only really started to pick up with increased defence spending in the 1940s.